Contrarian bet plays out for LIC once more

Indias insurance behemoth Life Insurance Corporation (LIC) has once again proved that it is a master of contrarian stock picking. The insurer increased stake in Tata Consultancy Services (TCS) every quarter between March 2015 and December 2017 — at a time when most Indian fund managers were underweight on the IT sector.

LIC increased its holding in TCS to 4.2 per cent from 2.3 per cent in the 12 quarters to December 2017. During this period, LIC bought 3.6 crore share of TCS at an average of price of Rs 2,376 per share amounting to Rs 8,476 crore, according to Bloomberg data. Based on Mondays closing price of R s3,415.2, LIC made a notional gain of 45 per cent on its investment in TCS during the said period.

However, LIC sold a portion of its holding in the March 2017 quarter ahead of a positive change in the investor sentiment about the future prospects of TCS based on a combination of strong momentum in deal wins, rising share of digital projects and higher project renewals. During the quarter, LIC trimmed its stake in TCS to 3.9 per cent from 4.2 per cent in December 2017, according to the data from the BSE.

Apart from LIC, big institutional investors such as Blackrock and JPMorgan have also been buying TCS shares for the last five quarters. Even in the April 2018 quarter so far, these two funds bought 46,600 and 1,004 shares, respectively.

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